Vail Resorts (who owns the Breckenridge Ski Resort) shook up the ski-resort world Monday with an early-morning announcement of its intent to acquire the Whistler Blackcomb ski resort in Canada. The deal is expected to close in the next two to four months.
Disclosed terms of the deal — which a Vail Resorts release called a “strategic combination” — add up to about $1.06 billion in U.S. currency, paid in both cash and stock to Whistler Blackcomb stockholders. The announced deal states that Whistler Blackcomb shareholders will receive a cash payment of $17.50 per share, and will receive .0975 shares of Vail Resorts stock per share. The total payment adds up to $36 per share — $27.36 per share in U.S. currency.
According to a Vail Resorts release detailing the deal, the corporation will continue Whistler’s support for a “master development agreement” with parties including the Squamish and Lil’wat Nations, as well as the Province of British Columbia and the city of Whistler.
The release also states that Whistler will continue to have “principally local Canadian leadership,” with day-to-day operations run from Whistler. With the exception of some employees who may have duplicate corporate functions, the release states that Vail Resorts intends to retain the “vast majority” of Whistler Blackcomb employees.
Vail Resorts also stated its intent to “invest substantially” in resort improvements and continue the Canadian resort’s current and planned environmental sustainability initiatives.
TWO STRONG COMPANIES
In a telephone interview after the deal was announced, Vail Resorts president and CEO Rob Katz said discussions between the resort companies came about during relatively routine conversations the Broomfield-based company has with officials throughout the ski industry.
“The reason this came together is that both companies are in a very strong position now,” he said, adding the deal will allow both companies to build on their relative strengths.
While he wouldn’t disclose how long negotiations took, he did say that “a deal of this size requires a lot of thought and discussion.”
Operations for the coming season will be business as usual at both Whistler and at Vail Resorts’ properties, he said. But, he added, when the Vail Resorts Epic Pass is valid at Whistler for the 2017-18 ski season, the company expects the deal to create more than just another spot where pass holders can ski.
The U.S. dollar is currently very strong compared to the Canadian dollar and other currencies. That has affected visits to the U.S. from Canada. But, Katz said, exchange rates move up and down over time. What the Epic Pass does is allow skiing at one price.
“You have the option of taking care of your season based on where you want to be.”
He added that one of the ideas behind the Epic Pass is to encourage pass holders to take more than one winter trip since their lift tickets are already paid for.
The deal also gives pass holders more options to head to better snow.
He said Vail Resorts’ current geographic diversity allows the company to withstand the vagaries of winter weather. He noted that a three-season drought in the Lake Tahoe area was offset by better snow at other resorts.
Whistler puts yet another geographic zone into that mix.
WHY IT WORKS
Ralf Garrison is a principal of The Advisory Group of Denver. One of that group’s divisions is Destimetrics, a market-research firm that tracks and analyzes lodging and other economic factors in mountain resorts. The firm counts Vail Resorts among its clients.
He said he was as surprised as everyone else when news broke about the deal Monday morning. But, he said, a number of factors about the deal make a lot of sense.
Among those factors is currency exchange. This is a very good time to buy Canadian assets with American money, he said.
Another factor is the audience Whistler attracts: Beyond its sheer size — around 8,000 skiable acres — and the fact that it leads all North American resorts in skier visits, Garrison said Whistler is a popular destination for Asian guests.
Vail Resorts has for several years been interested in tapping the Asian market. The Whistler deal gives the company a “foot in the door” of that market, he said.
Additionally, he said Whistler has in many ways transcended the seasonality of many ski resorts, with strong business in the spring, summer and fall.
EFFECTS ON VAIL?
In Vail, former Vail Resorts president and longtime industry executive Andy Daly said the move was a “tremendous announcement” for Vail Resorts shareholders.
“They’re paying a lot for it,” he said of Vail Resorts’ side of the deal. On the other hand, the company is acquiring the biggest resort in North America. “It’s a tremendous, iconic resort.”
That’s true to form for Vail Resorts, Garrison said, adding that the company’s portfolio already includes resorts with “almost icon-level” name recognition on their own. Rolling all those resorts into one pass creates a whole bigger than the sum of its parts, he said.
While Daly acknowledged that the move is a good one for Vail Resorts, he added that the acquisition could be a detriment to the town of Vail. But, he added, he’s confident the corporation will continue to keep its namesake ski area a premier destination.
The company’s acquisition of Park City, for example, has ruffled some feathers in Vail, with some saying Vail Resorts has put too much focus on the Utah resort.
Daly isn’t buying that, noting that Vail Resorts this year is replacing Chair 17 on Vail Mountain and adding that the corporation has put the biggest emphasis on Vail with its new Epic Discovery summer projects.
Antlers at Vail general manager Rob LeVine has been among those who worried about the Vail Resorts’ focus in the wake of its Park City purchase. He said the Whistler deal feels different in a way.
Wall Street also seemed to greet the news warmly: Vail Resorts stock on the New York Stock Exchange closed the trading day at $155.46 per share, an increase of almost 8 percent.
Vail resident George Gillett, who owned Vail Associates before it became Vail Resorts, praised the deal and had high praise for Katz.
“On one hand, he’s been outstanding for shareholders and, on the other hand, for guests,” Gillett said. “It would be hard to find a CEO who’s done a better job, in any business.”